Completed initial public offering of 34,500,000 Valvoline Inc.™
shares on September 28th at $22.00 per share,
raising $759 million in equity capital; Valvoline also completes $750
million in corporate debt issuance

Net income of $65 million leads to earnings of $0.32 per diluted
share

Adjusted earnings grow 4 percent to $0.29 per diluted share

Lubricant volumes increase 2 percent

Adjusted EBITDA of $111 million, an increase of 12 percent

Adjusted EBITDA as a percentage of sales increases 200 basis points

Fiscal 2016 Financial Highlights

Net Income of $273 million leads to earnings of $1.33 per diluted
share

Adjusted earnings grow 6 percent to $1.31 per diluted share

Lubricant volumes increase 4 percent

Adjusted EBITDA of $457 million, an increase of 9 percent

Adjusted EBITDA as a percentage of sales increases 230 basis points

Valvoline Inc.™ (NYSE: VVV), a leading supplier of premium branded
lubricants, today announced preliminary financial results for the fourth
quarter and fiscal year ended September 30, 2016.

In its first quarter as a public company, Valvoline reported increases
in lubricant volumes and sales of 2 percent, or 43.5 million gallons to
44.5 million gallons and $484 million to $494 million, respectively. Net
income for the quarter was $65 million, leading to earnings per diluted
share of $0.32. The Company also reported a 12 percent increase in
adjusted earnings before interest, taxes, depreciation and amortization
(adjusted EBITDA) and adjusted earnings per diluted share growth of 4
percent from $0.28 to $0.29.

These solid fourth quarter results were driven by growth in premium
product sales, sound execution with channel partners, significant
increases in same store sales and store count, and by the February
acquisition of 89 Oil Can Henry’s stores. Continued volume growth in
emerging markets also contributed to Valvoline’s productive quarter.

For fiscal 2016, Valvoline reported a 4 percent increase in lubricant
volume to 174.5 million gallons. Net income for the year was $273
million leading to earnings per diluted share of $1.33. The Company also
reported a 9 percent increase in adjusted EBITDA, reaching $457 million,
and adjusted earnings per share diluted share (EPS) growth of 6 percent
from $1.24 to $1.31. Sales mix was strong during the year with premium
lubricant volume growing in both Core North America and Quick Lubes.
Reduced product selling prices reflecting lower raw material costs
offset favorable mix, leading to a 2 percent decline in sales.

Valvoline’s strategy to invest in and grow market share across its three
business segments – Core North America, Quick Lubes and International –
has produced strong results through enhanced distribution to retail and
installer customers; 10 straight years of same-store sales growth at
Valvoline Instant Oil Change (VIOC); and continued strength in
international growth markets, including China, India and Mexico.

Adjusted Results and the Use of Non-GAAP Data

Certain items in this news release are presented on an adjusted basis as
the Company believes this more accurately reflects the ongoing
performance of the business. For a reconciliation of non-GAAP data,
please refer to tables 5, 6, 7 and 8 in this news release.

For the fourth quarter of fiscal 2016, two key items produced a net
favorable impact of $17 million to operating income. The first was a $23
million gain due to remeasurements of pension and other post-retirement
benefit plans. The second was a $6 million reduction related to costs
associated with the separation of Valvoline from Ashland. The year ago
quarter included one key item, a $44 million loss on remeasurements of
pension and other post-retirement benefit plans.

For fiscal 2016, the same two key items affecting fourth quarter results
led to a net gain of $12 million to operating income whereas fiscal 2015
included two key items resulting in a net reduction of $60 million to
operating income.

Separation from Ashland and Initial Public Offering

On September 28, 2016, Valvoline completed the initial public offering
of its common stock at a price of $22.00 per share, taking the first
step in separating from Ashland and establishing a new shareholder base,
reflecting the midcap consumer brand nature of the business. In addition
to raising $759 million in equity capital at the time of the IPO,
Valvoline raised $750 million of corporate debt. Ashland continues to
own 83 percent of Valvoline’s outstanding common stock.

“Our operational separation from Ashland is a seminal event in
Valvoline’s 150-year history as it gives us the agility to pursue growth
opportunities unique to a stand-alone company in our industry,” said
Chief Executive Officer, Sam Mitchell.

“Valvoline’s strong leadership team, supported by its dedicated
employees, was instrumental in ensuring a smooth transition, while
delivering a record year and maintaining the strong performance needed
to position the Company for future success,” Mr. Mitchell continued.

The following is a summary of key fourth quarter and fiscal 2016
financial highlights. Details on business segment financials are
highlighted below.

Fourth Quarter and Fiscal 2016 Financial Overview

(in millions except per-share amounts)

Quarter Ended

Year Ended

September 30

September 30

2016

2015

2016

2015

Operating Income

$

118

$

45

$

431

$

323

Key items*

17

(44

)

12

(60

)

Adjusted operating income*

$

101

$

89

$

419

$

383

Net income

$

65

$

33

$

273

$

196

Adjusted EBITDA*

$

111

$

99

$

457

$

421

Diluted Earnings per share (EPS)

From net income

$

0.32

$

0.16

$

1.33

$

0.96

Key items*

(0.03

)

0.12

(0.02

)

0.28

Adjusted EPS from net income*

$

0.29

$

0.28

$

1.31

$

1.24

Cash flows provided by operating activities

$

125

$

62

$

311

$

330

Free cash flow*

$

91

$

43

$

245

$

285

* See Tables 5, 6 and 7 for Valvoline definitions and U.S. GAAP
reconciliations.

Core North America delivered volume gains in a number of its channels to
market, including the Do-It-Yourself (DIY) and Heavy Duty
markets. DIY was driven by expanded distribution and strong marketing
and promotion campaigns, while Heavy Duty was driven by expanded
distribution. Growth of branded lubricant volume was offset by lower
private label volume, leading to a modest 1 percent lubricant volume
decline for the segment. Sales declined 3 percent due to reduced selling
prices reflecting lower raw material costs. Operating income was $42
million in both fiscal 2016 and 2015 fourth quarters.

Quick Lubes

The Quick Lubes business segment reported quarterly growth in lubricant
volume, sales, and operating income of 22 percent, 19 percent and 38
percent, respectively. These results were driven by strong performances
from each of the business segment’s three platforms: VIOC company
operations, VIOC franchise operations and Express Care, Valvoline’s
program for smaller independent operators. Company operations generated
5.4 percent same-store sales growth, while adding 16 stores to the
network. Franchise operations generated 7.4 percent same-store sales
growth, while adding 21 stores to the network. The February acquisition
of Oil Can Henry’s added 89 stores to the network, 47 to company
operations and 42 to franchise operations. In total, VIOC added 126
stores, growing from 942 at the end of fiscal 2015 to 1,068 at the end
of fiscal 2016.

Fiscal Fourth Quarter

Fiscal Year

Same-storesales

Net StoreAdditions

Same-storesales

Net StoreAdditions(including Oil CanHenry's)

Company

5.4%

2

6.2%

63

Franchise

7.4%

11

8.0%

63

In addition, 19 stores were added to the Express Care platform, bringing
the total number of stores in that network to 347.

Strong execution of Valvoline’s SuperPro model, our proprietary service
process, providing “Quick, Easy, Trusted” service to customers, remains
the key contributor to results from the Valvoline Instant Oil Change
network, both company-owned and franchised units. These fourth quarter
results once again reflected successful execution of that model.

International

Lubricant volume growth of 8 percent in the emerging markets was offset
by softness in the mature markets of Europe and Australia, leading to 2
percent lubricant volume growth within the business segment. This
compares with a strong quarter in the prior year where lubricant volume
grew 15 percent year-over-year creating a challenging comparison. Sales
declined 2 percent due to reduced selling prices reflecting lower raw
material costs. Operating income was consistent with the prior year, as
higher earnings from consolidated affiliates were offset by reduced
joint venture (JV) income, which is accounted for using the equity
method. Currency had no material effect to segment sales or earnings.

Equity and royalty income from unconsolidated JVs, including the Cummins
JVs, totaled $3 million for the quarter, bringing the total for the full
fiscal year to $19 million.

Fiscal 2016 Performance

In fiscal 2016, Valvoline posted a 4 percent lubricant volume increase
as compared to fiscal 2015, a 39 percent increase in net income and a 9
percent increase to adjusted EBITDA. Sales for the year declined 2
percent.

“Valvoline delivered strong results in fiscal 2016 in what was a very
demanding year for the team,” said Chief Executive Officer Sam Mitchell.

“We are now looking ahead to fiscal 2017 and laying the foundation for
accelerated growth by making targeted investments in digital marketing
and infrastructure, while ramping up our store growth plans.”

Fiscal 2016 lubricant volume and profit growth reflect market share
gains across Core North America, driven by increased distribution and
effective marketing at key retail accounts and expansion of our
installer distribution network; an increase in premium product sales;
strong same-store sales growth and store additions in Quick Lubes,
including the Oil Can Henry’s acquisition; and, continued strong gains
in select emerging markets. The Oil Can Henry’s acquisition contributed
$34 million to sales and $8 million to adjusted EBITDA for the year.
Currency had a negative effect to sales of $31 million and adjusted
EBITDA of $4 million.

Valvoline’s balance sheet finished the year with total debt of $749
million, and $172 million of cash and cash equivalents, yielding a net
debt position of $577 million. The Company’s cash position was enhanced
by the underwriter’s execution of the over-allotment option of the
initial public offering, which generated $94 million of proceeds. The
Company generated $311 million in cash from operating activities, while
making $66 million in capital investments, resulting in $245 million of
free cash flow. Valvoline’s balance sheet and free cash flow profile
remain strong, giving the Company flexibility to invest organically,
pursue opportunistic bolt-on acquisitions and evaluate additional
returns of capital to shareholders. The Company also continues to
evaluate strategies to reduce risk and administrative costs of the $904
million of net unfunded pension and other post-retirement benefit
obligations Valvoline assumed as part of the separation from Ashland.

Valvoline expects adjusted EBITDA margin of 24 percent to 25 percent,
which includes expected income generated from pension and other
post-retirement benefit plans of $66 million, but excludes $25 million
to $30 million of anticipated one-time separation-related costs. As a
result, the Company expects diluted, adjusted EPS to be in the range of
$1.28 to $1.38.

Capital expenditures are expected to increase in fiscal 2017 to $70
million to $80 million, supporting investments in digital marketing and
infrastructure, and new store growth. Fiscal 2017 free cash flow is
projected to be approximately $90 million to $100 million, which
includes approximately $30 million of expected separation related cash
costs.

For the fiscal 2017 first quarter, Valvoline anticipates year-over-year
sales growth of 4.5 percent to 6 percent and an adjusted EBITDA margin
of 23.5 to 24.5 percent, which includes $17 million of estimated net
pension and other post-retirement benefit income, but does not include
anticipated one-time costs related to the separation.

Conference Call Webcast

Valvoline will host a live webcast of its fourth-quarter fiscal 2016
conference call at 8 a.m. ET on Wednesday, November 9, 2016. The webcast
and supporting materials will be accessible through Valvoline's website
at http://investors.valvoline.com.
Following the live event, an archived version of the webcast and
supporting materials will be available for 12 months.

Initial Public Offering and Basis of Presentation

In September 2016, in connection with the IPO, Ashland Inc. contributed
the capital stock of its business unit Valvoline to Valvoline Inc.,
which is now a controlled, public subsidiary of Ashland. Prior to this
time, Ashland held substantially all of the assets and liabilities
related to Valvoline’s current business.

Valvoline’s fourth quarter, year-ended September 30, 2016 and prior
periods information has been prepared on a stand-alone basis, derived
from Ashland’s consolidated financial statements and accounting records
using the historical results of operations, and assets and liabilities
attributed to Valvoline’s operations, including allocations of expenses
from Ashland. The historical financial results in this release differ
from the results of the Valvoline segment for the same periods
previously reported by Ashland. A reconciliation between the results
reported in this release and the Valvoline segment results reported by
Ashland is included in table 9. Our consolidated and segment results are
not necessarily indicative of our future performance and do not reflect
what our financial performance would have been had we been a stand-alone
public company during the periods presented.

Use of Non-GAAP Measures

In addition to our net income determined in accordance with U.S. GAAP,
we evaluate operating performance using certain non-GAAP measures
including adjusted income measures such as EBITDA, which we define as
our net income, plus income tax expense (benefit), net interest and
other financing expenses, and depreciation and amortization, and
adjusted EBITDA, which we define as EBITDA adjusted for losses (gains)
on pension and other postretirement plans remeasurement, net gain (loss)
on acquisitions and divestitures, impairment of equity investment and
separation costs. These measures are not prepared in accordance with
U.S. GAAP. Management believes the use of non-GAAP measures on a
combined and reportable segment basis assists investors in understanding
the ongoing operating performance of our business by presenting
comparable financial results between periods. The non-GAAP information
provided is used by our management and may not be comparable to similar
measures disclosed by other companies, because of differing methods used
by other companies in calculating EBITDA and adjusted EBITDA. EBITDA and
adjusted EBITDA provide a supplemental presentation of our operating
performance on a combined and reportable segment basis. We have also
given prospective guidance using non-GAAP measures, determined in the
same way described above, but have decided it is not practicable to
reconcile that information.

We use free cash flow as an additional non-GAAP metric of cash flow
generation. By deducting capital expenditures from operating cash flows,
we are able to provide a better indication of the ongoing cash being
generated that is ultimately available for both debt and equity holders,
as well as other investment opportunities. Unlike cash flow from
operating activities, free cash flow includes the impact of capital
expenditures, providing a more complete picture of cash available to
capital providers. Free cash flow has certain limitations, including
that it does not reflect adjustments for certain non-discretionary cash
flows, such as allocated costs. The amount of mandatory versus
discretionary expenditures can vary significantly between periods. Our
results of operations are presented based on our management structure
and internal accounting practices. The structure and practices are
specific to us; therefore, our financial results and free cash flow are
not necessarily comparable with similar information for other comparable
companies. Free cash flow has limitations as an analytical tool and
should not be considered in isolation from, or as an alternative to, or
more meaningful than, cash flows provided by operating activities as
determined in accordance with U.S. GAAP. Because of these limitations,
you should rely primarily on cash flows provided by operating activities
as determined in accordance with U.S. GAAP and use free cash flow only
as a supplement.

About ValvolineTM

Valvoline Inc. (NYSE:VVV) is a leading worldwide producer and
distributor of premium-branded automotive, commercial and industrial
lubricants and automotive chemicals. In 2016, it ranks as the #2
quick-lube chain by number of stores and #3 passenger car motor oil in
the Do-It-Yourself market by volume brand in the United States.
The brand operates and franchises approximately 1,068 Valvoline Instant
Oil ChangeSM centers in the United States. It also markets
ValvolineTM lubricants and automotive chemicals; MaxLifeTM
lubricants created for higher-mileage engines, SynPowerTM
synthetic motor oil; and ZerexTM antifreeze. Visit www.valvoline.com
to learn more.

C-VVV

Forward-Looking Statements

This news release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Valvoline™ has
identified some of these forward-looking statements with words such as
"anticipates," "believes," "expects," "estimates," "is likely,"
"predicts," "projects," "forecasts," "may," "will," "should" and
"intends" and the negative of these words or other comparable
terminology. In addition, Valvoline™ may from time to time make
forward-looking statements in its annual report, quarterly reports and
other filings with the Securities and Exchange Commission (SEC), news
releases and other written and oral communications.

These forward-looking statements are based on Valvoline’s current
expectations and assumptions regarding, as of the date such statements
are made, Valvoline’s future operating performance and financial
condition, including Valvoline’s separation from Ashland (the
“separation”), the expected timetable for Ashland’s spin-off of its
remaining Valvoline common stock to Ashland shareholders (the
“spin-off”) and Valvoline’s future financial and operating performance,
strategic and competitive advantages, leadership and future
opportunities, as well as the economy and other future events or
circumstances. Valvoline’s expectations and assumptions include, without
limitation, internal forecasts and analyses of current and future market
conditions and trends, management plans and strategies, operating
efficiencies and economic conditions (such as prices, supply and demand,
cost of raw materials, and the ability to recover raw-material cost
increases through price increases), and risks and uncertainties
associated with the following: demand for Valvoline’s products and
services; sales growth in emerging markets; the prices and margins of
Valvoline’s products and services; the strength of Valvoline’s
reputation and brand; Valvoline’s ability to develop and successfully
market new products and implement its digital platforms; Valvoline’s
ability to retain its largest customers; potential product liability
claims; achievement of the expected benefits of the separation;
Valvoline’s substantial indebtedness (including the possibility that
such indebtedness and related restrictive covenants may adversely affect
Valvoline’s future cash flows, results of operations, financial
condition and Valvoline’s ability to repay debt) and other liabilities;
operating as a stand-alone public company; Valvoline’s ongoing
relationship with Ashland; failure, caused by Valvoline, of Ashland’s
spin-off of Valvoline common stock to Ashland shareholders to qualify
for tax-free treatment, which may result in significant tax liabilities
to Ashland for which Valvoline may be required to indemnify Ashland; and
the impact of acquisitions and/or divestitures Valvoline has made or may
make (including the possibility that Valvoline may not realize the
anticipated benefits from such transactions). These forward-looking
statements are subject to a number of known and unknown risks,
uncertainties and assumptions. In light of these risks, uncertainties
and assumptions, the forward-looking events and circumstances discussed
in this news release may not occur, and actual results could differ
materially and adversely from those anticipated or implied in the
forward-looking statements.

You should not rely upon forward-looking statements as predictions of
future events. Although Valvoline believes that the expectations
reflected in these forward-looking statements are reasonable, Valvoline
cannot guarantee future results, level of activity, performance or
achievements. In addition, neither Valvoline nor any other person
assumes responsibility for the accuracy and completeness of any of these
forward-looking statements. In light of the significant uncertainties in
these forward-looking statements, you should not regard these statements
as a representation or warranty by Valvoline or any other person that
Valvoline will achieve its objectives and plans in any specified time
frame, or at all. These forward-looking statements speak only as of the
date of this news release. Except as required by law, Valvoline assumes
no obligation to update or revise these forward-looking statements for
any reason, even if new information becomes available in the future.

Please see the Risk Factors Section of Valvoline’s Registration
Statement on Form S-1 filed with the SEC, which is available on
Valvoline's website at http://investors.valvoline.com
or on the SEC's website at http://www.sec.gov
for a more complete discussion of the risks and uncertainties mentioned
above and for discussion of other risks and uncertainties. All
forward-looking statements attributable to Valvoline are expressly
qualified in their entirety by these cautionary statements as well as
others made in this news release, and hereafter in Valvoline’s other SEC
filings and public communications. You should evaluate all
forward-looking statements made by Valvoline in the context of these
risks and uncertainties.

Financial results are preliminary until Valvoline's Form 10-K is filed
with the SEC.

TM Trademark, Valvoline or its subsidiaries, registered in
various countriesSM Service mark, Valvoline or its
subsidiaries, registered in various countries

Valvoline Inc. and Consolidated Subsidiaries

Table 1

STATEMENTS OF CONSOLIDATED INCOME

(In millions except per share data - preliminary and unaudited)

Three months ended

Year ended

September 30

September 30

2016

2015

2016

2015

Sales

$

494

$

484

$

1,929

$

1,967

Cost of sales

300

326

1,168

1,282

GROSS PROFIT

194

158

761

685

Selling, general and administrative expense

60

96

270

291

Corporate expense allocation

19

21

79

79

Equity and other income

3

4

19

8

OPERATING INCOME

118

45

431

323

Net interest and other financing expense

9

-

9

-

Net loss on acquisition and divestiture

-

-

(1

)

(26

)

INCOME BEFORE INCOME TAXES

109

45

421

297

Income tax expense

44

12

148

101

NET INCOME

$

65

$

33

$

273

$

196

BASIC AND DILUTED EARNINGS PER SHARE

$

0.32

$

0.16

$

1.33

$

0.96

BASIC AND DILUTED COMMON SHARES OUTSTANDING

205

205

205

205

SALES

Core North America

$

239

$

246

$

979

$

1,061

Quick Lubes

125

105

457

394

International

130

133

493

512

$

494

$

484

$

1,929

$

1,967

OPERATING INCOME (LOSS)

Core North America

$

42

$

42

$

212

$

200

Quick Lubes

33

24

117

95

International

21

21

74

65

Unallocated and other

22

(42

)

28

(37

)

$

118

$

45

$

431

$

323

DEPRECIATION AND AMORTIZATION

Core North America

$

4

$

5

$

16

$

17

Quick Lubes

5

4

17

16

International

1

1

5

5

$

10

$

10

$

38

$

38

Valvoline Inc. and Consolidated Subsidiaries

Table 2

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions - preliminary and unaudited)

September 30

September 30

2016

2015

ASSETS

Current assets

Cash and cash equivalents

$

172

$

-

Accounts receivable

363

335

Inventories

131

125

Other assets

56

17

Total current assets

722

477

Noncurrent assets

Property, plant and equipment

Cost

727

628

Accumulated depreciation

403

374

Net property, plant and equipment

324

254

Goodwill and intangibles

267

171

Equity method investments

26

29

Deferred income taxes

389

8

Other assets

89

39

Total noncurrent assets

1,095

501

Total assets

$

1,817

$

978

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Current portion of long-term debt

$

19

$

-

Trade and other payables

177

174

Accrued expenses and other liabilities

191

125

Total current liabilities

387

299

Noncurrent liabilities

Long-term debt

730

-

Employee benefit obligations

886

13

Deferred income taxes

2

24

Other liabilities

137

25

Total noncurrent liabilities

1,755

62

Stockholders’ (deficit) equity

(325

)

617

Total liabilities and stockholders' (deficit) equity

$

1,817

$

978

Valvoline Inc. and Consolidated Subsidiaries

Table 3

STATEMENTS OF CONSOLIDATED CASH FLOWS

(In millions - preliminary and unaudited)

Three months ended

Year ended

September 30

September 30

2016

2015

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

65

$

33

$

273

$

196

Adjustments to reconcile net income to cash flows from operating
activities

Depreciation and amortization

10

10

38

38

Debt issuance cost amortization

4

-

4

-

Deferred income taxes

13

(9

)

13

(9

)

Equity income from affiliates

(1

)

(2

)

(12

)

(12

)

Distributions from equity affiliates

5

4

16

18

Net loss on divestitures

-

-

1

26

Impairment of equity investment

-

-

-

14

Pension contributions

(2

)

-

(2

)

-

(Gain) loss on Valvoline stand-alone pension plan measurements

(42

)

2

(42

)

2

Change in operating assets and liabilities (a)

73

24

22

57

Total cash provided by operating activities

125

62

311

330

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property, plant and equipment

(34

)

(19

)

(66

)

(45

)

Proceeds from disposal of property, plant and equipment

-

-

1

1

Purchase of operations, net of cash acquired

(13

)

-

(83

)

(5

)

Proceeds from sale of operations

-

-

-

23

Other investing activities

-

(1

)

-

-

Total cash used in investing activities

(47

)

(20

)

(148

)

(26

)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash contributions from parent

60

-

60

-

Proceeds from initial public offering, net of offering costs

719

-

719

-

Net transfers to parent

(1,419

)

(42

)

(1,504

)

(304

)

Proceeds from borrowings, net of issuance costs of $15

1,372

-

1,372

-

Repayments on borrowings

(637

)

-

(637

)

-

Total cash provided by (used in) financing activities

95

(42

)

10

(304

)

Effect of currency exchange rate changes on cash and cash
equivalents

(1

)

-

(1

)

-

INCREASE IN CASH AND CASH EQUIVALENTS

172

-

172

-

Cash and cash equivalents - beginning of period

-

-

-

-

CASH AND CASH EQUIVALENTS - END OF PERIOD

$

172

$

-

$

172

$

-

(a)

Excludes changes resulting from operations acquired or sold.

Valvoline Inc. and Consolidated Subsidiaries

Table 4

INFORMATION BY INDUSTRY SEGMENT

(In millions - preliminary and unaudited)

Three months ended

Year ended

September 30

September 30

2016

2015

2016

2015

CORE NORTH AMERICA

Lubricant sales (gallons)

25.1

25.4

101.2

99.9

Premium lubricants (percent of U.S. branded volumes)

42.3%

36.8%

41.4%

36.6%

Gross profit as a percent of sales (a)

37.0%

37.2%

41.2%

36.6%

QUICK LUBES

Lubricant sales (gallons)

5.6

4.6

20.2

17.4

Premium lubricants (percent of U.S. branded volumes)

58.2%

55.2%

57.1%

54.5%

Gross profit as a percent of sales (a)

41.7%

38.4%

41.6%

39.8%

INTERNATIONAL

Lubricant sales (gallons)

13.8

13.5

53.1

50.1

Premium lubricants (percent of lubricant volumes)

28.9%

31.8%

29.0%

30.9%

Gross profit as a percent of sales (a)

33.0%

31.1%

31.4%

30.2%

(a)

Gross profit as a percent of sales is defined as sales, less cost of
sales divided by sales.

Valvoline Inc. and Consolidated Subsidiaries

Table 5

RECONCILIATION OF NON-GAAP DATA - NET INCOME AND DILUTED EARNINGS
PER SHARE

(In millions, except per share data - preliminary and unaudited)

Three months ended

Year ended

September 30

September 30

2016

2015

2016

2015

OPERATING INCOME (LOSS)

*Gains (losses) on pension and other postretirement plan
remeasurements

$

23

$

(44

)

$

18

$

(46

)

*Separation costs

(6

)

-

(6

)

-

*Impairment of equity investment

-

-

-

(14

)

All other operating income

101

89

419

383

Operating income

118

45

431

323

NET INTEREST AND OTHER FINANCING EXPENSE

*Accelerated debt issuance cost amortization due to repayment

4

-

4

-

All other Interest and other financing expense

5

-

5

-

Net interest and other financing expense

9

-

9

-

*NET LOSS ON ACQUISITION AND DIVESTITURE

-

-

(1

)

(26

)

INCOME TAX EXPENSE (BENEFIT)

Income tax expense (benefit) of key items*

7

(18

)

4

(28

)

All other income tax expense

37

30

144

129

44

12

148

101

NET INCOME

$

65

$

33

$

273

$

196

BASIC AND DILUTED EARNINGS PER SHARE

$

0.32

$

0.16

$

1.33

$

0.96

Diluted earnings per share impact from key items

(0.03

)

0.12

(0.02

)

0.28

ADJUSTED DILUTED EARNINGS PER SHARE FROM NET INCOME

$

0.29

$

0.28

$

1.31

$

1.24

* These items are considered "key items".

Valvoline Inc. and Consolidated Subsidiaries

Table 6

RECONCILIATION OF NON-GAAP DATA - FREE CASH FLOW

(In millions - preliminary and unaudited)

Three months ended

Year ended

September 30

September 30

Free cash flow (a)

2016

2015

2016

2015

Total cash flows provided by operating activities

$

125

$

62

$

311

$

330

Less:

Additions to property, plant and equipment

(34

)

(19

)

(66

)

(45

)

Free cash flows

$

91

$

43

$

245

$

285

(a)

Free cash flow is defined as cash flows provided by operating
activities less additions to property, plant and equipment.

Valvoline Inc. and Consolidated Subsidiaries

Table 7

RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA

(In millions - preliminary and unaudited)

Three months ended

Year ended

September 30

September 30

2016

2015

2016

2015

Adjusted EBITDA - Valvoline

Net income

$

65

$

33

$

273

$

196

Add:

Income tax expense

44

12

148

101

Net interest and other financing expense

9

-

9

-

Depreciation and amortization

10

10

38

38

EBITDA

128

55

468

335

Separation costs

6

-

6

-

(Gains) losses on pension and other postretirement plan
remeasurements

(23

)

44

(18

)

46

Impairment of equity investment

-

-

-

14

Net loss on acquisition and divestiture

-

-

1

26

Adjusted EBITDA

$

111

$

99

$

457

$

421

Adjusted EBITDA - Core North America

Operating Income

$

42

$

42

$

212

$

200

Add:

Depreciation and amortization

4

5

16

17

Other adjustments

-

-

-

-

Adjusted EBITDA

$

46

$

47

$

228

$

217

Adjusted EBITDA - Quick Lubes

Operating Income

$

33

$

24

$

117

$

95

Add:

Depreciation and amortization

5

4

17

16

Other adjustments

-

-

-

-

Adjusted EBITDA

$

38

$

28

$

134

$

111

Adjusted EBITDA - International

Operating Income

$

21

$

21

$

74

$

65

Add:

Depreciation and amortization

1

1

5

5

Impairment of equity investment

-

-

-

14

Adjusted EBITDA

$

22

$

22

$

79

$

84

Valvoline Inc. and Consolidated Subsidiaries

Table 8

RECONCILIATION OF NON-GAAP DATA - NON-PENSION AND POSTRETIREMENT
OPERATING INCOME

(In millions - preliminary and unaudited)

Three months ended

Year ended

September 30

September 30

2016

2015

2016

2015

Operating Income

$

118

$

45

$

431

$

323

Pension and other postretirement plans' impact on operating income:

Gains (losses) from remeasurement of pension and other
postretirement plans

23

(44

)

18

(46

)

Net pension and other postretirement plans' income exclusive of
service cost (a)

6

2

17

9

Service cost for pension and other postretirement plans

(4

)

(2

)

(10

)

(9

)

Total impact to operating income

25

(44

)

25

(46

)

Operating Income excluding pension and other postretirement plans'
impact

$

93

$

89

$

406

$

369

(a)

Represents the non-service related components of the pension and
post retirement plans. The non-service related components include
interest cost, expected return on plan assets and amortization of
prior service costs.

Balance Sheet Data

Projected benefit obligation at September 30, 2016

$

3,211

Fair value of plan assets at September 30, 2016

2,307

Net pension and other postretirement plan liability

$

904

Valvoline Inc. and Consolidated Subsidiaries

Table 9

RECONCILIATION OF VALVOLINE INC. TO ASHLAND-VALVOLINE SEGMENT DATA

(In millions - preliminary and unaudited)

Quarter Ended September 30, 2016

ValvolineInc.

Adjustments

ValvolineSegment ofAshland Inc.

Sales

$

494

$

-

$

494

Operating Income

Core North America

42

Quick Lubes

33

International

21

Unallocated and other

22

(22

)

(a)

Operating Income

$

118

$

(22

)

$

96

(a)

Adjustments represent costs reported in the Ashland Unallocated and
other segment that are attributed to Valvoline. These adjustments
were pension and other postretirement benefit income of
approximately $28 million offset by $6 million of separation costs.

Year Ended September 30, 2016

ValvolineInc.

Adjustments

ValvolineSegment ofAshland Inc.

Sales

$

1,929

$

-

$

1,929

Operating Income

Core North America

212

Quick Lubes

117

International

74

Unallocated and other

28

(28

)

(b)

Operating Income

$

431

$

(28

)

$

403

(b)

Adjustments represent costs reported in the Ashland Unallocated and
other segment that are attributed to Valvoline. These adjustments
were primarily pension and other postretirement benefit income of
approximately $35 million offset by $6 million of separation costs.

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